Liquidity is the degree to which a corporation can satisfy its short-term obligations using cash flows and assets that can be quickly converted into cash. In this context, liquidity refers to the available cash, borrowing power, and ability to turn…

A company’s business operations typically consist of a series of consecutive stages. For example, consider a manufacturing company whose operating cycle includes the purchase of raw materials, inventory production, sale to customers, and debt collection, as shown below: A company’s…

Weaknesses in corporate governance practices and stakeholder management processes expose a company and its stakeholders to several risks. On the contrary, effective corporate governance and stakeholder management practices can benefit a company’s stakeholders. Adopting effective rules and implementing acceptable control…

Stakeholder management emphasizes the need for a company to consider the needs of all its stakeholder groups. It lays the structure for stakeholder groups to exercise influence, control, and protect their interest in a company. Corporate governance lays the foundation…

The term ‘principal-agent relationship’ or simply ‘agency relationship’ describes an arrangement where one entity, the principal, legally appoints another entity, the agent, to act on its behalf by providing a service or performing a particular task. The agent is expected…

Debt and equity investors are progressively adopting a stakeholder viewpoint rather than a strictly shareholder-focused one. They prioritize Environmental, Social, and Governance (ESG) factors when making investment decisions. As such, corporate issuers need to incorporate these factors when setting goals…

A stakeholder is any individual or entity with a significant interest in a company. Corporations have a complex ecosystem that includes not only the shareholders but also other stakeholders. These groups mutually relate with the company for economic success. However,…

Comparison between Debt and Equity Claims Debtholders, also known as lenders, provide a company with finite-term financial capital. In return, the issuers agree to make regular interest payments and repay the principal on predetermined dates. Lenders do not possess decision-making…

A corporation can either be regarded as private or public. The following factors determine this classification: Issuance of shares. Exchange listing and share transfer. Registration and disclosure requirements. Issuance of Shares. Public Companies may issue additional shares in the capital…

In this section, we shall delve more into corporations. Corporate issuers are corporations that raise their capital in financial markets. Understanding corporate issuers is essential for financial analysts because they can raise more capital from investors than governments worldwide. Key…